Another great report, Roy. Can you remind me how you calculate the RATIONALE's breakout confirmation levels? The daily close levels cited don't seem to use a standard % move from the boundary. Are they based on an Average True Range? Thanks
Hello Mike, I appreciate your response. You're absolutely correct, some are based on the Average True Range. In principle, as outlined in the book "Technical Analysis of Stock Trends" - by Edwards and Magee, I aim for a daily close of 3% away from the boundary for equities. However, there are instances where adhering strictly to this principle might cause us to miss out on opportunities. In such situations, it becomes necessary to exercise patience, wait for a pullback, or implement a trading strategy with a broader risk-reward approach.
This is why my choice of using either ATR-30 or ATR-10 depends on various factors, including the breakout's characteristics (such as volume), prevailing market conditions (considering factors like risk-on or risk-off sentiment, macroeconomic drivers, etc.), and overall portfolio risk management strategy (if that position is not correlated with any of the instruments that I have in my portfolio). I hope this helps :)
Another great report, Roy. Can you remind me how you calculate the RATIONALE's breakout confirmation levels? The daily close levels cited don't seem to use a standard % move from the boundary. Are they based on an Average True Range? Thanks
Hello Mike, I appreciate your response. You're absolutely correct, some are based on the Average True Range. In principle, as outlined in the book "Technical Analysis of Stock Trends" - by Edwards and Magee, I aim for a daily close of 3% away from the boundary for equities. However, there are instances where adhering strictly to this principle might cause us to miss out on opportunities. In such situations, it becomes necessary to exercise patience, wait for a pullback, or implement a trading strategy with a broader risk-reward approach.
This is why my choice of using either ATR-30 or ATR-10 depends on various factors, including the breakout's characteristics (such as volume), prevailing market conditions (considering factors like risk-on or risk-off sentiment, macroeconomic drivers, etc.), and overall portfolio risk management strategy (if that position is not correlated with any of the instruments that I have in my portfolio). I hope this helps :)